Archived Posts May 2008 - Page 3 of 5 | Acton PowerBlog

I never for a moment thought that a life could be decided by something as arbitrary as one’s address.

The often-maligned US health care system is by no means a free market for health care services; rather, it is more of a hybrid public/private system. It’s imperfect and in need of reform, to be sure. But heaven help us if that reform takes the form of a governmental takeover of the entire system. How such a “reform” would improve our flawed system is beyond me.

Congress is debating a number of measures designed to “rescue” homeowners facing foreclosure as the housing and credit crisis grinds more and more financial and real estate assets to dust. Much of the reporting on the credit crisis, in the tradition of objective journalism, strains to explain the problem objectively, as if what was happening in the markets was somehow an act of nature, something unguided by human action. Thus, people “fell” into the problem as if pulled by a gravitational force:

Congress has been struggling for months to respond to a mortgage crisis that has left more than 1.2 million homes in foreclosure, with an additional 3 million forecast to join them over the next two years. Most involve subprime loans that established terms the borrowers could not afford. As homeowners defaulted and fell into foreclosure, home prices fell more than 10 percent. Many borrowers who are having trouble making payments find that they cannot sell or refinance their homes because they owe their banks more than their homes are worth.

But markets and industries and trade are guided by human beings, who have fairly well known tendencies. In “The Human Foundation of Financial Risk,” Alex J. Pollack of the American Enterprise Institute looks at that depressingly predictable mass hysteria that has propelled one financial bubble after another from the South Sea Bubble of 1720 and beyond. The “great twenty-first century housing and mortage bubble,” he argues, is just the most recent example.

Pollack notes how the mortgage securities market, looking out on a housing expansion that seemed unending, became “enamored” of statistical models of risk crafted by some of the best and brightest on Wall Street. How well did these arcane formulas come to grips with the human factor?, Pollack asks.

Did they pick up the effects of short memories–of the inclination to convince ourselves that we are experiencing “innovation” and “creativity” when all that is happening is a lowering of credit standards by new names–or of what are rightly considered unearned risk premiums being counted as profits and paid out as bonuses? Did the models adequately take into account the cumulative human forces of optimism, gullibility, short-term focus, genuine belief in momentum, extrapolation of so-far-profitable speculations, group psychology, and increasing fraud? Did the models keep up with the fact that as they were running, the behavior was changing? Obviously, they did not.

He reminds us that the reason financial bubbles are so seductive is that, for awhile at least, everyone associated does pretty well. Homeowners were getting more and more house with easier borrowing terms, lenders were generating profits from ever more creative strategies, and Wall Street was packaging and reselling this stuff to investors all over the world. All the while, Congress and the White House were crowing about ever higher levels of home ownership and participation in the American Dream.

Pollack points to the “widespread realization” in early 2007 that a large proportion of subprime mortages and subprime mortgage securities were going to default as the beginning of the end. It was the disillusion that crashed the party. “The end of belief ends the bubble and begins the bust,” Pollack writes. Let the panic begin.

We’re now in the early phase in what is likely to be a massive push in Washington to bring new regulation to the financial services industry and “rescue” more homeowners in an election year (but probably not the homeowners who have been paying their bills). Pollack again sees how this typically plays out:

In the wake of a bust, there is always a predictable series of political activities: first, the search for the guilty; second, the fall of previously esteemed heroes; and third, legislation and increased regulation to ensure that “this will never happen again.” But, with time, it always does happen again. Consider in this context the statement of the comptroller of the currency in 1914 that with the creation of the Federal Reserve, “financial and commercial crises, or panics . . . seem to be mathematically impossible.”

Pollack talks about the “cumulative human forces” behind the bust. From a Christian perspective, these “cumulative” factors would also include a healthy awareness of the reality of sin. There will always be the risk of cheating and greed and theft in financial affairs, personal and corporate. When that risk is inflated with the bubble, then its effects, as we have seen, may be impossible to contain. And no group caught up in the enthusiasm of the housing and mortgage bubble was immune from it — not the homeowner, not the lender, not the securities market.

The new risk we face is that the regulatory cure proposed by Washington will have it’s own illusions of “innovation” and “creativity” — with a naive belief in the power of government to make any more financial crises “impossible.” Federal bailouts for both bankers and borrowers are on the table. Over-reaction and over-regulation is likely to follow. There will be no discussions about the nature of sin in Congressional hearings, but there will be plenty of demons. Mostly, mortgage lenders. As Pollack observes, it’s all too predictable.

Dana Joel Gattuso of the National Center for Public Policy Research warns that a provision in the pending farm bill will encourage increasing federal control of private lands (de facto federal ownership) via the mechanism of conservation easements.

That got me wondering just how much of the United States is owned by the federal government. Surprisingly, the information seems hard to come by. A study (pdf) conducted by congressional Republicans in 2005 and based on 2004 data found that the federal government owned more than 653 million acres, about 29 percent of the nation’s total land area. But when I went to the Web site of the agency to which that document directed me, the General Services Administration, I wasn’t able to locate the 2004 report, nor any more recent report that provides updated figures.

In this 2004 article, Robert Smith claimed that no one knows how much land the government owns because there is no bureau charged with keeping track.

Granted that the amount is constantly changing as the government acquires and divests (you can peruse available properties here), I’ll go along with Gattuso’s view that we want to avoid further expansion of government land ownership. Consider, too, that the figures cited above include only the national government’s holdings: state, county, and municipal governments no doubt own millions of additional acres.

The new Italian government was sworn in on May 9, headed for the third time by Prime Minister Silvio Berlusconi. The center-right coalition has a vast majority both in the Chamber of Deputies and the Senate, giving it a good chance of serving its full five-year term.

For the first time since 1948, there will be no communists represented in either chamber. For forty years following World War II, the Italian Communist Party was the second largest party in the country and the most influential in Western Europe, as Michael Barone points out in a recent analysis.

The largest party was the Christian Democrats (DC), who led every government and guaranteed a type of “Italian” stability. Most of all, the DC was perceived by the people as the only defence against the communist threat. But after the corruption scandals of the 1980s, the fragmentation of political parties and the fall of the Berlin Wall, the threat of communism faded away along with the Christian Democrats’ primary raison d’être.

In the 1990s, the political situation changed systematically with splits in both parties. Hard-core Communists re-fashioned themselves into smaller fringe parties and will not be represented at all in the new parliament. While not left out of parliament entirely, the old Christian Democrats, now primarily known the Unione Democratica di Centro, are not a part of Berlusconi’s governing coalition.

This means that for the first time in the history of the Italian republic, a government will not have a Christian Democrat minister or an explicitly Catholic spokesman. This does not mean, however, that none of the new ministers are Catholics. For example, the minister for economic development, Claudio Scajola, was a Christian Democrat when he was younger, and Berlusconi himself received a serious Catholic education. And most if not all of the ministers are baptized Catholics and would call themselves as such. However, Sandro Magister a known journalist has underlined that Berlusconi can be considered the most secular politician.

But will the new government reflect a Catholic identity? The upstart newspaper Il Foglio has called it “post-Catholic” but the influential Jesuit-run journal La Civiltà Cattolica is pleased with the defeat of the communists and seems more worried about coalition parties such as the secessionist Northern League. A weaker Catholic identity may affect not only the Church’s reputation and influence but reinforce radical secularism.

While the Christian Democratic tradition is rich in Italy and some other Western European countries, the question now is whether such “officially” Christian parties are necessary. On several matters of Catholic social doctrine, good Catholics can and probably should disagree on its application. Sometimes a secular politician can have more common sense than an “officially” religious one. The formation of individual politicians and voters, rather large political parties, seems more suitable to the spirit of the times.

This does not mean the Catholic Church in Italy will be silent; it never has been. The Church’s public statements are usually on matters such as marriage, abortion, euthanasia, and biomedical research. But beyond these non-negotiable issues, there are many areas where Catholic politicians and other members of the laity can and must promote Catholic identity and Church teaching. All without a Christian party label.

On Wednesday the European Commission again delayed a decision on whether European farmers may grow more genetically modified (GM) crops. The commission claimed that more scientific analysis is needed before three new crops can be approved. But curiously, the European Food Safety Authority (EFSA) has already twice analyzed the crops and found that they pose no danger to public health.

Divisions seem to have broken out within the commission on how to proceed with GM food. This comes at a time when biotech investors are increasingly exasperated with European procrastination on the issue.

The intra-Commission conflict on GM food is most bizarrely expressed in the open attempts by Environment Commissioner Stavros Dimas to discredit the EFSA, an agency set up by the Commission in 2002 in order to specifically investigate food safety concerns. By undermining the authority of the EFSA, Dimas is colliding with Agriculture Commissioner Mariann Fischer Boel, who has defended the agency. The result is a complete stalemate which may leave the Europe years behind in biotech investment compared to the US and other countries.

Dimas’s hostility to GM food is cheered on by some environmental NGOs, in particular Greenpeace and Friends of the Earth. Greenpeace boasts that it orchestrated a campaign of 130,000 emails in order to obstruct the approval of the crops.

These NGOs have virtually no expertise in the area of consumer health research but join Dimas’s ritual attacks on the risk assessments done by the EFSA. It is particularly striking that they try to bring the EFSA into disrepute by implying that the World Health Organization (WHO) is speaking out against GM crops. But here’s what the WHO actually says:

“GM foods currently available on the international market have passed risk assessments and are not likely to present risks for human health. In addition, no effects on human health have been shown as a result of the consumption of such foods by the general population in the countries where they have been approved.”

European worries about food safety are to a large extent based on the experience of the 1990s when a number of food scandals, in particular BSE or mad cow disease, caused understandable anxiety among consumers. All of these scandals, however, were entirely unrelated to GM food; it is irresponsible to exploit these fears in the current debate on biotechnology.

It is not difficult to see that at bottom the controversy is not so much about health and science but about politics and whose ox is being gored. In the European Council of Ministers, more agrarian-based countries like Greece (Dimas’s home country), Italy, Austria and Poland tend to vote against GM foods while states where traditional farming is not as dominant like the UK and the Netherlands are more open to biotech.

The politicization of the GMO debate is especially damaging at a time of global food price inflation. Future improvements in agricultural productivity will become increasingly necessary and biotech can play an important role in this area. The Commission must not allow pseudo-scientific excuses to stand in the way of serving the interests of the European, and indeed the global, consumer.

This year’s symposium question was: If the medium affects the message, how will the Christian message be affected by the new media? Be sure to check out all the posts linked above for the responses judged to be the best.

Normally I don’t celebrate coming in second in anything (it’s not “runner-up,” it’s “first loser”), but in this case I’m honored to share the company with these other worthy authors.

Why should your high school apply for the Catholic High School Honor Roll? One reason is ecclesial recognition. The video below highlights the experience of St. Theodore Guerin High School in Noblesville, IN. Bishop William L. Higi of the Diocese of Lafayette-in-Indiana attended the school’s press conference to honor the school’s accomplishments. The video shows the press conference, and does a fantastic job of describing the Honor Roll.

Other schools also saw this type of recognition, including Salesianum School in Delaware. Bishop Michael Saltarelli of the Diocese of Wilmington, and Very Rev. Joseph Morrissey, OSFS, Provincial Superior of the Oblates of St. Francis de Sales, were present at the awards assembly.

There is one week left for schools to apply for the Honor Roll. They can apply online at www.chshonor.org by May 15, 2008. Obviously it’s a busy time in a school year, so if schools need extra time, they can contact us at info@chshonor.org to make arrangements.

While the value to schools is quite clear, many fine schools still have not heard about the program or do not take the time to submit an application. It is a tragedy for schools – perhaps even Catholic schools you know – to miss this opportunity. Many of the schools that do not apply may be your alma mater or located in your area. Your encouragement will help them reap the substantial benefits the program offers. Contacting the principal and development director at these schools goes a long way to encourage schools to participate in the Honor Roll. Schools can only benefit from participating.